Dealing with a Low Assessment

jerickson100February 28, 2010

We listed our house earlier this week, and yesterday we got our 2010 assessment. The new assessment is 25K less than last year, and 40K less than our listing price. I would think that we have it listed way too high, but the assessment seems so low that I am struggling with it. I have talked to our realtor, and he wants to hang tight for the moment. I would love some second thoughts before I worry even more!

Here are some relevant details:

1. The assessment is based on a square footage of about 100 square feet too small -- for some reason, the county has the wrong number.

2. Our house is three houses from a bigger road (the road is two lanes, so not a highway or anything).

3. Our house has been totally updated (granite, stainless, etc.) unlike most in the neighborhood. Our house is also one of the biggest in the neighborhood, although there are plenty of similar sized houses in the general area and the neighborhood is a good one.

4. There is a house for sale right across the majorish road (in fact, the house backs up to it) in a similar subdivision. The house is 150 square feet smaller and assessed $45K more.... It has not been updated.

5. We listed the house on Wednesday, and we have had one showing and twelve people came to the open house today. Our market generally is SLOW right now.

Here is the listing if anyone has thoughts:

http://www.realtor.com/realestateandhomes-detail/12009-Carmon-Street_Richmond_VA_23233_1116417379

I hate being priced so much over the assessment, but I also can't see pricing my house at the same price as houses 400-500 square feet smaller. If anyone has any thoughts, I would really appreciate it!

Jessica

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mpinto

An assessment isn't an appraisal. It's a number your town uses to base taxes on. Have you seen comparable sales data for your area? This is what you should base your listing price on. Hope this helps.

    Bookmark   February 28, 2010 at 7:55PM
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jerickson100

Thanks for your feedback. We have looked at the comps -- two houses sold in our neighborhood in the last few months, and both were between $132-134 per square foot. Our house is priced at a bit under $124 per square foot (which makes sense to us given our proximity to the larger road and the fact that it is about 400 square feet bigger than the two comps and therefore probably less per square foot).

I guess I am worried because I talked to a realtor today who told me that she is advising all of her clients to price at the assessment value. The prices in our area are all over the place right now and people are dropping prices quite a bit, so it is tough to get a sense of the active comp average.

    Bookmark   February 28, 2010 at 8:05PM
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kats_meow

I have never heard of pricing a house based upon assessment value. Around here it is very very common that assessments can be a lot lower than sale prices. Of course, maybe it is different in your area.

    Bookmark   February 28, 2010 at 9:52PM
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hendricus

In Michigan assessments are required to be at actual value. Whether they are or not depends on how good the assessment people are.

    Bookmark   February 28, 2010 at 11:22PM
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brickeyee

An appraisal has nothing to do with a tax assessment.

Many tax assessments claim to be 'fair market value' but rarely actually hit the number.

Assessors like to stay enough UNDER the actual value to minimize appeals of the assessment.

Appraisals can use $/square foot to try and adjust between properties that are close but not exactly the same size, but it is not used as a real determining factor in the overall assessment.

If you want an appraised value, hire an appraiser.

"I guess I am worried because I talked to a realtor today who told me that she is advising all of her clients to price at the assessment value."

I would interview some additional RE agents.
She should be doing a CMA to set price, not just referring to tax assessments.

Of course a CMA requires some actual work be performed ...

    Bookmark   March 1, 2010 at 9:17AM
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sweet_tea

Sounds like you are very confused as to what the price your home and you will also be confused about counter-offers and sales price when that time comes.

I suggest you spend approx $300 and get a real appraisal from an appraiser. Else you might get scared and lower your price too much and end up selling for $10k cheaper than what you could have gotten. Or, you might be overpriced and sit on the market forever.

Knowing your true market value is too important at this point and you need to just hire the appraiser.

I did this when I sold and it was the best choice that I made. My spouse didn't agree with me at the time, but I went ahead anyway and got the appraisal. They typically come out within a couple days and complete the appraisal paperwork a few days after that. My spouse later said it was a very good choice to get the appraisal. Due in part to getting the appraisal (and pricing correctly), I sold my home while the comps that were for sale at the same time sat on the market for over a year.

    Bookmark   March 1, 2010 at 9:18AM
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terriks

I guess I am worried because I talked to a realtor today who told me that she is advising all of her clients to price at the assessment value.

I certainly wouldn't list with her! Sounds like she is too lazy to do a market analysis.

Brickeye is right on.

    Bookmark   March 1, 2010 at 2:20PM
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stapleface

As others have stated, the assesment doesn't truly ascertain what the value of the house is. It is just what the township thinks it is worth. The house is worth whatever the market will bear. I know (at least here in Jersey) that I would be greatful for a low assesment. That just means less property taxes that need to be paid. My house assesses for about $100k less than fair market value.

    Bookmark   March 1, 2010 at 3:03PM
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